Charles Schwab helped revolutionize the brokerage industry when, in 1975, it became one of the first firms to offer discounted stock trades. This move allowed American investors to buy stocks with sharply lower commissions that those charged by Wall Street investment houses. E*TRADE had an equally disruptive impact in the 1990s as the first broker to offer low-cost online trades that eliminated phone calls and trips to a local branch.
- Account Minimum: $0
- Fees: Free stock, ETF trading, $0.65 per options contract
- Account Minimum: $0
- Fees: No commission for stock/ETF trades. Options are $0.50-$0.65 per contract, depending on trading volume.
In our 2020 Best Online Brokers reviews, Charles Schwab earned higher scores than E*TRADE in our Best Stock Trading Apps, Best for International Trading, Best for Low Cost, and Best for ETFs categories. Meanwhile, E*TRADE nudged out Charles Schwab in our Best Overall, Best for Beginners, Best for Options, and Best for Day Trading rankings.
Overall, Investopedia found that Charles Schwab is a great choice for self-directed investors and traders who want access to professional advice and portfolio management, while E*TRADE may be better suited for active traders and investors looking for a customizable trading platform.
On Nov. 25, 2019, Charles Schwab announced a buyout of TD Ameritrade's online brokerage. The transaction itself is expected to close in the second half of 2020, and in the meantime, the two firms will operate autonomously. Schwab expects the merger of its platforms and services to take place within three years of the close of the deal.
On Feb. 20, 2020, Morgan Stanley announced it will acquire E*TRADE, the latest in a wave of consolidation for the industry. The transaction is expected to close in the fourth quarter of 2020. Under the deal, E*TRADE will keep its brand and branches.
E*TRADE has been in the business for nearly four decades, and this experience has paid off in terms of offering very intuitive and easy-to-navigate platforms. It offers two main web-based platforms—E*TRADE and Power E*TRADE—and two matching mobile apps. It's easy to open and fund an account, whether you're on a mobile device or computer.
Founded in 1971, Charles Schwab has been around even longer than E*TRADE. It offers three web-based platforms, including Schwab.com, StreetSmart Edge (its premier trading platform), and StreetSmart Central. Two mobile apps—Schwab Mobile and StreetSmart Mobile—round out its platform offerings. The company makes it easy to open and fund an account: you can do so online, via mobile app, by phone, or in one of more than 300 branches.
Charles Schwab and E*TRADE have reasonably easy-to-navigate websites with screening tools, portfolio analysis, news, educational content, and basic order tickets. Both brokers have put effort into developing solid mobile apps that offer access to watchlists, streaming real-time data and news, charting and research, and trade tickets.
Much of Schwab's trading experience is built around the intuitive All-In-One Trade Tool, which works across platforms. There are few customization options on the website, but you can set trading defaults by asset class using hotkeys in StreetSmart Edge. Streaming real-time quotes are standard on all platforms. You can stage orders and submit multiple orders on Schwab.com. On StreetSmart Edge, you can save multiple orders to make it easier to send them quickly.
E*TRADE's standard website can be difficult to navigate due to its two-level menus (a common problem for most brokers). However, the fully customizable Power E*TRADE platform is intuitive, and you can access all your favorite tools in a single layout. You have access to streaming real-time quotes across all platforms, and you can stage orders and send a batch simultaneously. You can also place orders from a chart and track them visually.
With both brokers, you can attach notes to trades to help you later evaluate your trading activity and decision-making processes.
The two brokers provide robust mobile apps that offer streaming real-time quotes, trade tickets, multiple order types (including conditional orders), in-app research, and charting. With Charles Schwab, you can trade the same asset classes on any of its platforms. E*TRADE offers the same except for single name bond trading, which is not available through its app.
Range of Offerings
Charles Schwab and E*TRADE both offer a full range of investment offerings, including equities, ETFs, futures, options, and thousands of no-load, no-fee mutual funds. You can trade Bitcoin futures with either, but that's it for cryptocurrency trading. If you want access to international exchanges and Forex, you'll have to go with Charles Schwab. E*TRADE also does not allow you to hold fractional shares while Charles Schwab rolled out its fractional trading program, Stock Slices, in June of 2020.
Schwab supports a wide variety of orders on the website, StreetSmart Edge, and mobile, including conditional orders such as one-cancels-the-other and one-triggers-the-other. E*TRADE clients also have access to numerous order types on the website and Power E*TRADE platforms, including conditional orders. While mobile users can enter a limited number of conditional orders, you can stage orders for later entry on all platforms. Both brokers allow you to stage orders for later entry, and you can select the tax lot when you close part of a position or set an account-wide default for the tax lot choice (e.g., average cost, LIFO, etc.).
Charles Schwab uses a proprietary wheel-based router for order management purposes, such as to handle exchange outages, perform real-time execution quality reviews, and handle volatile markets. Most orders in stocks and multiple-exchange listed options are routed to third-party wholesalers, which balances execution quality in terms of increased price improvement and improved execution quality statistics with its own cost savings. Quarterly information regarding execution quality is published on Schwab's website.
E*TRADE’s order routing technology uses both spray and sequential routing, and most orders are sent to market makers. About 90% of orders for S&P 500 stocks receive price improvement. The router looks for a combination of execution speed and quality, and the company states it takes measures to get the best execution available in the market. E*TRADE publishes its order routing report on its website and updates it quarterly.
Only E*TRADE offers backtesting capability, which may be essential if you want to develop your own trading systems or test an idea before risking cash.
Charles Schwab and E*TRADE have $0 commissions for online equity, options, and ETF trades for U.S.-based customers, and per-contract options fees are $0.65. Schwab also offers free OTCBB trading; with E*TRADE, it costs $6.95 per transaction, or $4.95 if you place 30 or more trades per quarter. Schwab will set you back more if you buy mutual funds outside the no-fee list ($49.95 versus E*TRADE's $19.99). Broker-assisted trades are $25.00 with either company.
Both brokers generate interest income from the difference between what you're paid on your idle cash and what they earn on customer balances. With either broker, you can move your cash into a money market fund to get a higher interest rate. The two brokers have stock loan programs in which you can share the revenue it generates from lending the stocks held in your account to other traders or hedge funds (usually for short sales).
Charles Schwab and E*TRADE are comparable in terms of research and charting. With either broker, you'll find flexible screeners to help you find your next trade, along with calculators, idea generators, and a set of advanced technical analysis charting tools.
Schwab's StreetSmart Edge software includes fundamental research with real-time news, company earnings, dividends, and ratings. Power E*TRADE includes basic research, Morningstar ratings, performance data, and headline news. You can also review TipRanks recommendations and access a suite of planning tools.
Charles Schwab and E*TRADE's portfolio analysis offerings are similar. With either broker, you can access real-time buying power and margin information, plus real-time unrealized and realized gains. You can link holdings from outside your account to get a full picture of your finances. Both offer tax reports, and you can calculate the tax impact of future trades and calculate the internal rate of return (IRR).
Charles Schwab offers extensive investor education with its Schwab Live daily broadcasts, research from the Schwab Center for Financial Research, an array of articles on the Insights & Ideas page, as well as webinars and in-person events for investors and traders. The company offered more than 1,000 live events in 2019, including 155 trader-focused events. E*TRADE’s Knowledge center contains investing-related articles, help using the technology, and trading-related content. E*TRADE holds about 30 live events each year, but a major expansion is planned for its webinar program for 2020.
Charles Schwab offers 24/7 phone line support with access to live brokers, as well as 24/7 online chat with a human agent. You can also visit one of its over 360 branch locations for in-person help. For retail clients calling customer support, Charles Schwab says its average wait time on hold was 22 seconds in 2019. E*TRADE offers 24/7 phone line support with access to brokers as well as to retirement specialists, financial consultants, active trader consultants, and product specialists. You can chat online with a human representative and get in-person help at a relatively limited number (29) of branches. E*TRADE says its average wait time for customer service was 52 seconds.
Charles Schwab and E*TRADE's security are up to industry standards. You can log into any app using biometric (face or fingerprint) recognition, and both brokers protect against account losses due to unauthorized or fraudulent activity. Schwab carries excess Securities Investor Protection Corporation (SIPC) insurance provided by London insurers with an aggregate limit of $600 million, limited to a combined return to any customer of $150 million, including cash of up to $1.15 million. E*TRADE's excess SIPC coverage, also provided by London insurers, has an aggregate limit of $600 million, with a customer limit of $150 million, including cash of up to $900,000.
Through Nov. 2019, neither brokerage had any significant data breaches reported by the Identity Theft Research Center.
Charles Schwab and E*TRADE are both considered powerhouses in the online brokerage industry—and both are about to get bigger if the planned acquisitions go through. They ranked closely for nearly all metrics in our 2020 Best Online Brokers awards. Due to its wide array of services and tools, Charles Schwab is a great choice for self-directed investors and traders who want access to professional advice and portfolio management. With a major upgrade to its options analysis and trading capabilities, plus a fully customizable trading platform, E*TRADE is well-suited for experienced active traders and investors.
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In addition, every broker we surveyed was required to fill out an extensive survey about all aspects of its platform that we used in our testing. Many of the online brokers we evaluated provided us with in-person demonstrations of its platforms at our offices.
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